Finance Terminology Test! Trivia Quiz

23 Questions | Attempts: 248

Finance Terminology Test! Trivia Quiz - Quiz

How well do you know finance terminology, and would you be able to pass this quiz? You must determine the meaning of the descriptions and choose which term best fits. You should recognize a way of investing in a particular product or security without owning it and using debt to supplement investment. This amazing quiz possesses finance terminology; everything will add up when you take this quiz.

Questions and Answers
  • 1. 
    A market where prices are falling and investors, anticipating losses, tend to sell. This can create a self-sustaining downward spiral.
  • 2. 
    Products that, in their basic form, are all the same so it makes little difference from whom you buy them. That means that they have a market price. You would be unlikely to pay more for iron ore from a particular mine, for example.
  • 3. 
    A commitment by a government to maintain its currency at a fixed value in relation to another currency. Typically this is done by the government buying its own currency to force the value up, or selling its own currency to lower the value. 
  • 4. 
    A way of investing in a particular product or security without having to own it. The value can depend on anything from the price of coffee to interest rates or what the weather is like.
  • 5. 
    A payment by a company to its shareholders, usually linked to its profits.
  • 6. 
    In business, how much all of the shares put together are worth it. In a house,  the amount your house is worth minus the amount of mortgage debt that is outstanding on it.
  • 7. 
    A private investment fund with a large, unregulated pool of capital and very experienced investors.
  • 8. 
    Making an investment to reduce the risk of price fluctuations to the value of an asset. For example, if you owned a stock and then sold a futures contract agreeing to sell your stock on a particular date at a set price. A fall in price would not harm you - but nor would you benefit from any rise.
  • 9. 
    In modern political parlance, the belief that the state can directly stimulate demand in a stagnating economy. For instance, by borrowing money to spend on public works projects like roads, schools, and hospitals.
  • 10. 
    Using debt to supplement investment.
  • 11. 
    How easy it is to convert something into cash.
  • 12. 
    Similar to a pyramid scheme, an enterprise where - instead of genuine profits - funds from new investors are used to pay high returns to current investors.
  • 13. 
    Central banks increase the supply of money by "printing" more. In practice, this may mean purchasing government bonds or other categories of assets, using the new money, rather than physically printing more notes. The idea is to add more money into the system to avert deflation and encourage lending and spending. One of the dangers of this tactic is hyperinflation.
  • 14. 
    Essentially, a contract that can be assigned a value and traded. It could be a stock, bond or mortgage debt, for example.
  • 15. 
    A technique used by investors who think the price of an asset, such as shares, currencies or oil contracts, will fall. They borrow the asset from another investor and then sell it in the relevant market. The aim is to buy back the asset at a lower price and return it to its owner, pocketing the difference.
  • 16. 
    These carry a higher risk to the lender (and therefore tend to be at higher interest rates) because they are offered to people who have had financial problems or who have low or unpredictable incomes.
  • 17. 
    The difference in the rate of return in two different investments.
  • 18. 
    Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value.
  • 19. 
    A financial structure that groups individual loans, bonds or assets in a portfolio, which can then be traded.
  • 20. 
    Things that have a useful life of more than one year, for example, buildings and machinery.
  • 21. 
    The provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services.
  • 22. 
    A professionally managed type of collective investment scheme that pools money from many investors and invests typically in investment securities.
  • 23. 
    An investment strategy which consists of the discovery and exploitation of inefficiencies in the pricing of bonds, i.e. buying the cheaper one and short selling the more expensive, thus making money when the discrepancy corrects itself.
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